The President’s Fiscal Year (FY) 2017 budget request for the U.S. Department of Defense (DoD) makes it back-to-back years with a budget increase. It’s a nice change of pace for an industry plagued by budget constraints and sequestration prior to the FY 2016 request. Increased funding for radar, electronic warfare (EW), command, control, communications, computers, intelligence, surveillance, and reconnaissance (C4ISR), and overall RDT&E funding as well as a significant bump in cybersecurity promise growth for defense electronics suppliers.

The total FY 2017 budget request is $582.7 billion, up $2.4 billion from $580.3 billion enacted in FY 2016. The FY 2017 budget also “complies with the Bipartisan Budget Act of 2015, giving the department both funding stability and protection from the damage of sequestration in FY 2016 and FY 2017,” according to the DoD. The overall RDT&E budget for FY 2017 is $ 71.765 billion, and increase over the FY 2016 enacted total of $69.968 billion. However, funding dropped about slightly for the DoD’s Science and Technology (S&T) program from $13 billion in FY 2016 to $12.5 billion for FY 2017.

Designers of embedded computing, signal processing, open architectures, and other commercial-off-the-shelf (COTS) solutions should find a steady market as the DoD’s missions continue to rely more and more on cyber, C4ISR, radar, and EW systems to keep an edge on battlefields and in peace time. Each of these applications has an insatiable need for bandwidth and processing capability that is only fueled by embedded computing and open architecture designs.

“I believe there will be continued focus to replace, or upgrade aging systems through data conversion, emulation, virtualization, and the use of embedded, small form factor computing devices,” says Michael Carter, Chief Executive Officer of IXI Technologies in San Diego in this month’s COTS Confidential, which dicusses the Navy market for COTS electronics. “Technology exists today that can translate data from one protocol to another, with the use of an electronic interface with software operating code. Technology also exists that can use the same operating code, without the electronic interface running on an embedded computer in a server – true virtualization. Embedded computing, especially products with multiple processors, interfaces and are small, light and consume little power will dominate.”

Cyber operations gets a nice increase in the FY 2017 budget request, with a $900 million increase from FY 2016 enacted levels to $6.7 billion. According to the budget documents the “new cyber strategy focuses on building cyber capabilities and organizations for DoD’s three primary cyber missions: to defend DoD networks, systems, and information; defend the Nation against cyberattacks of significant consequence; and provide cyber support to operational and contingency plans.” For more on the DoD cyber strategy, click here.

Total electronic warfare funding in the FY 2017 RDT&E budget is $298 million, more than 100 million over the FY 2016 enacted total of $184 million. The Navy is receiving the bulk of the EW RDT&E funding, with $183 million requested. The Army and Air Force are slated to receive $102.5 million and $12.5 million respectively.

Procurement for the Navy’s AN/SLQ-32 Electronic Warfare Suite is down slightly from the FY 2016 enacted total of $296 million to about $275 million.

Radar

Radar is still a hot market for defense electronics suppliers as these systems continue to rely high performance embedded computing to meet their intensive signal processing demands. RDT&E funding for radar programs comes in at about $755 million for FY 2017, down about $5 million from $760 million the FY 2016 enacted total. Key programs getting FY 2017 RDT&E funding include Air and Missile Defense Radar (AMDR) at $144.3 million, Ground/Air Task Oriented Radar (G/ATOR) at $83,538 million, and Three Dimensional Long-Range Radar (3DELRR) at $49.5 million.

Radar program procurement for the FY 2017 RDT&E request comes in at about $560 million, a slight decrease over the FY 2016 enacted total of $568 million. Counterfire radars for the Army top the procurement request at $314 million for FY 2017, an increase of more than $100 million over the FY 2016 enacted total of $198 million.

The continued investment in both radar and EW systems will only empower the military RF and microwave market.

“I actually think the overall aerospace and defense market will be flat to growing at a slight percentage, but RF content in this market will continue to expand faster than the market itself,” says Doug Carlson in an interview with the McHale Report this month. “We view active antenna technology as ubiquitous across multiple applications from communications to radar to electronic warfare. When military systems have active antennas the RF content goes up dramatically. The overall market will be flat, but as systems move to active antennas RF content will grow. Sensors are key to everything. Just because the military may not physically be there doesn’t mean they are not watching via blimps, drones, space platforms, etc.”

The DoD’s “Program Acquisition Cost by Weapons System” booklet has $112.1 billion for procurement and $71.8 billion for Research, Development, Test, and Evaluation (RDT&E) of major weapon system programs. Of the $183.9 billion, $72.7 billion is for programs that have been designated as Major Defense Acquisition Programs (MDAPs) or Major Automated Information Systems MAIS. The FY 2017 budget request for C4I supports the net-centricity service-based architecture pattern for information sharing, according to the DoD. It is being implemented by the C4I community through building joint architectures and roadmaps for integrating joint airborne networking capabilities with the evolving ground, maritime, and space networks. It covers the development of technologies like gateways, waveforms, network management, and information assurance. Two key programs in this area are the Warfighter Information Network-Tactical (WIN-T) and the Handheld, Manpack, and Small Form Fit (HMS) program.

WIN-T

WIN-T, which links warfighters in the battlefield with the Global Information Grid, is made up of four increments, according the DoD. Increment 1 provides “networking at the halt” by upgrading the Joint Network Node (JNN) satellite capability to access the Wideband Global Satellite. Increment 2 provides networking on-the-move to the company level. Increment 3 enables Integrated Network Operations development. The FY 2017 program calls for funding the technology refresh of obsolete COTS components for 34 WIN-T Increment 1 units and Adds X-Band terminals to Regional Hub Nodes. Funding for WIN-T Increment 2 supports procurement of 12 communications nodes (six tactical communications nodes and six points of presence), and continues fielding and support for previously procured Low Rate Initial Production (LRIP) equipment. The FY 2017 program also procures and fields 283 Battlefield Video-Teleconferencing Center III systems, provides program management support for Single Shelter Switch, High Capability Line of Sight, and Troposcatter Communications systems as they are transitioned to sustainment by the end of FY 2017. The prime contractors are General Dynamics Corp. in Taunton, Massachusetts, and Lockheed Martin Corp. in Gaithersburg, Maryland.

HMS program

The HMS program procures software-defined radios (SDRs) and has three product lines: the Rifleman Radio, the Manpack Radio, and the Small Form Factor Radios, according to the DoD. The FY 2017 program looks to fund the necessary efforts for executing the required full and open competition contract strategy for the Rifleman Radio and the Manpack radios. It also conducts testing for the Manpack and the Rifleman candidate products to demonstrate compliance with program requirements to assess effectiveness, suitability, and survivability and to obtain material release for Full Rate Production, according to the DoD. The program also funds support safety, spectrum supportability, and other certifications for fielding products. Procurement of the Rifleman and the Manpack Radios, support equipment, fielding, non-recurring engineering, and platform vehicle integration is funded as well. The prime contractors are General Dynamics C4 Systems Inc. in Scottsdale, Arizona; Harris Radio Corp. in Rochester, New York, and Thales Communications Inc. in Clarksburg, Maryland.

All of the above numbers indicate a healthy demand for embedded computing technology for military systems, especially in RDT&E efforts for next generation radar and EW systems.

However, uncertainty still reigns. As of this writing the presidential election is two days shy of Super Tuesday with Secretary Hilary Clinton leading the Democratic primary and Donald Trump leading the Republican primary. Neither are expected to provide Reagan era increase to the defense budget, community, but some in the industry think Trump will be good for the defense market in the long run, after some short term pain.

[Trump] has a great shot at winning the presidency, but is probably not the best choice for the aerospace and defense industry in the short term, says Eric Sivertson, Founder and CEO of QuantumTrace. I know that’s a shocker, but the reason is the defense industry has spent too much. A president with Trump’s business background will see it as over bloated with many inefficiencies and he will want to fix it. In long run I think it will be excellent for the defense industry, but in the near term a Trump presidency will create even more pain, more than Clinton or Sanders would. Trump is all about the art of the deal he will make deals and some will be painful, but it will probably be the right pill the DoD needs to take to clean it up and make it more economically efficient. I like the guy. He has potential to do good.” For more analysis on the election and its impact on the defense market, read “Presidential politics and defense electronics.”